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Should the current macroeconomic situation in Pakistan justify IFAD to withdraw its support to Pakistan?

Photo credit: Arif Ali/AFP

The current macroeconomic situation in Pakistan, where, according to recent estimates, the total debt would constitute about 60% of the GDP, raised concerns on the likelihood of Pakistan to repay its loans, and, consequently, on whether IFAD should continue lending to this country. This was one of the issues raised by one of the Executive Board members during the recent IFAD Executive Board meeting.

Contrarily to this position, we are of the opinion that investing in poverty reduction could contribute to macroeconomic stabilization, and that investing in activities that target the poor -- such as those supported by IFAD -- would contribute to reduce the vulnerability of the most vulnerable segments of society to the effects of macroeconomic instability.

We believe that the challenges that Pakistan is facing at the moment are actually an argument to continue the support to this country, not to withdraw it.